Many people
invest money in cheaper stocks for understanding the business of stock trading.
They think that by investing very small amounts in penny stocks to watch they can reap high profits. In fact,
investing money in stock exchanges is a long term investment, which will take
years to get tangible incomes from such investments. But statistics has shown
that stock exchange trading in penny
stock to buy is a profitable business, which has got an annual return of
about 37 % for the last 10 years.
Now let us
examine what is meant by penny share. Penny share gets its name from the mere
fact they are very cheap. The value of each share is below $5 and can be even
$1 or can be in pennies also. Because of this low value, they have a very
speculative appeal.
Advantages of
Penny Stocks
1. As
the per share price is very low, there is no need for a huge investment in penny stocks to watch.
2.
These penny stocks are easily available in the
market as penny stocks to buy and
anybody can buy it directly.
3.
The penny stock price moves quickly and
therefore there are chances of getting high income if everything turns out
positively and the investor plays prudently.
4.
Sometimes penny stock is traded as mid-cap stock,
which has greater profit potentials.
Disadvantages
1.
It is very easy to buy penny stocks as penny stocks to watch are always
available. But selling penny stocks is not an easy task.
2.
If you own penny stocks of a bankrupt company
chances of loss are imminent and grave.
3.
Pump and dump scams in penny stock to buy are very dangerous. The demand for a stock will
rise abruptly during pump stage. But if you buy any stocks of this type, you
will find it difficult to sell of these penny stocks for sale without incurring
some losses.
4.
A company with no or little track record may
move to bankrupt stage before the investor comes to know about it.
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